ARLINGTON, Va.—New home sales increased 7.2% in January to 670,000 annualized units, while sales in December were revised up 9,000 units.
Compared to 2022, January sales were down 19.4%.
“Anecdotes suggest broad builder incentives helped woo buyers unable to find options in the supply-constrained resale market,” said NAFCU Chief Economist and Vice President of Research Curt Long. “The price segment that saw the largest sales increase were those in the $150,000-$400,000 range, whose buyers are more likely to need extra incentives in order to make a purchase."
Based on current month sales, there were 7.9 months of supply in January – a 0.8-month decrease from December. The number of unsold homes left on the market decreased by 5,000 homes to 439,000, representing an 11.4 % increase from inventory levels a year ago.
New home sales were mixed in the census regions in January. The South saw the largest increase with a 17.1% jump in sales. Sales in the Northeast declined 19.4%, followed by the West (-7.3%), and the Midwest (-6.9%).
Builder Confidence Rises
“The National Association of Home Builders/Wells Fargo Housing Market Index found builder confidence rose in February to its highest level since September,” Long remarked. “Recent economic and inflation data suggest reduced odds of a recession but a growing need for Fed tightening, which should support further increases in mortgage rates. However, the new home market is much better supplied than the resale market."
Of note, the median new home price, non-seasonally adjusted, declined 8.2% in January to $427,000, amounting to 0.7% higher than a year earlier.
“NAFCU expects new home sales growth to continue to trend up modestly as more homebuyers are pushed to the new construction market,” concluded Long.
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